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Today we're going to take another
look at Priceline ( $PCLN Priceline.com Inc ).
Previously I looked at Priceline ( $PCLN Priceline.com Inc ) noting that the stock was moving higher, and was on
a breakout. Okay, that's great, so what do we do with it?
You should look at the daily chart,
if you're a short-term trader
this kind of move
can't be ignored. You can't ignore the fact that this stocks right up at
resistance,
so we've got a breakout.
Do you really want to buy a stock that's up this high? Sure it could keep
on going and as we know it did.
But it's really a risky buy, not to say that risk doesn't pay off, typically the
only reason people take high risk is because they're looking for high rewards.
If you're not looking for high rewards then why take the risk?
My point on this was,
that while the daily chart looked pretty good, it shows a volatility expansion;
in my view the real analysis here is on the weekly chart. You can see this
nice little bowl that Priceline ( $PCLN Priceline.com Inc ) has been
carving out for a while, it's been going back for over a year,
but this is really what I'm seeing. Let's do a real easy, quick measured move.
Just because I have a hard time with math I'll use round
numbers.
Let's say the base here is at $550.00
of this bowl pattern.
We're going to say the breakout was $775.00 that would have been just
today. So what's the difference
between
these two prices? Well, that would be $225.00. So we
add
the depth of this base
to 775.00
and what do we get?
Well, magically we get
$1000.00.
My bet is this could take a while or it could
happen tomorrow; it's not going to happen three weeks from tomorrow.
My bet is
that over the next, we'll say several months or even a year, you're
going to see Priceline ( $PCLN Priceline.com Inc ) continue this little breakout and ultimately test a thousand,
that's the way I'm going to be trading it and that is my price target.
Now you know my long-term view of it
and so I'm going to go back to the daily chart.
If that's my long term view then do you really think I care if
Priceline ( $PCLN Priceline.com Inc ) comes down to $750.00 or so? No, I would actually look at
that as an opportunity to add more. Over at Option Market Mentor we've got
a similar trade going on ConocoPhillips ( $COP ConocoPhillips ). The weekly
chart was really the prevailing chart
and we are up, I believe we've got a negative cost basis, meaning we've
actually gotten paid for buying
some January 62.50 calls by just trading around that
position using higher priced options; but that's for another day and
another venue.
The bottom line is this, if you've got a short term mindset
then fine, here's your chart,
maybe even the 15-minute chart, set your stop somewhere around
there
if you are short term trader. That's not my deal on this; this is a big
anaconda, any stock price that sells for
$777.00 is either Berkshire Hathaway ( $BRK.B Berkshire Hathaway Inc. ) on a real deep
discount
or a stock like Priceline ( $PCLN Priceline.com Inc ) or Google ( $GOOG Google Inc ). In those instances
I like to use the weekly chart because I think you can make more money